What Now! Interest Only Finishing.

Discussion in 'Investment Strategy' started by miscg, 7th May, 2019.

Join Australia's most dynamic and respected property investment community
Page 1 of 2
  1. miscg

    miscg Active Member

    Joined:
    25th Jun, 2015
    Posts:
    40
    Location:
    Sydney
    currently have 3 of my IP’s all coming out of interest only at the same time. Issue is repayments will be to high for me based on a slight slow down in business?

    Only other issue is loans are all low doc and lenders who are doing low doc ATM are asking for very high rates. Approximate amount of the 3 loans is 960k.

    Any ideas??
     
    miscg, 7th May, 2019
    #1
  2. Blacky

    Blacky Well-Known Member

    Joined:
    25th Jun, 2015
    Posts:
    2,066
    Location:
    Bali
    Sell
    Pay P&I
    Pay a higher rate
    Regret not taking action earlier when this has been a known issue for a couple of years
    Panic

    Call your broker tomorrow morning.

    Blacky
     
    Blacky, 7th May, 2019
    #2
    MTR, skater, JohnPropChat and 7 others like this.
  3. miscg

    miscg Active Member

    Joined:
    25th Jun, 2015
    Posts:
    40
    Location:
    Sydney
    They expire in October this year, i thought this may be enough time.
     
    miscg, 7th May, 2019
    #3
  4. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

    Joined:
    14th Jun, 2015
    Posts:
    10,653
    Location:
    Gold Coast (Australia Wide)
    where are the props ?

    ta
    rolf
     
    Rolf Latham, 7th May, 2019
    #4
  5. miscg

    miscg Active Member

    Joined:
    25th Jun, 2015
    Posts:
    40
    Location:
    Sydney
    Kellyville Ridge (Unit) NSW
    Houses QLD :
    Crestmead
    Logan central
     
    miscg, 7th May, 2019
    #5
  6. Trainee

    Trainee Well-Known Member

    Joined:
    24th May, 2017
    Posts:
    10,347
    Location:
    Australia
    LVR?
     
    Trainee, 7th May, 2019
    #6
  7. Rolf Latham

    Rolf Latham Inciteful (sic) Staff Member Business Plus Member

    Joined:
    14th Jun, 2015
    Posts:
    10,653
    Location:
    Gold Coast (Australia Wide)
    QLd ones are in slow markets right now, but can still be sold if one is willing to meet the market

    Id guess selling just one would relieve enough pressure for a while ?

    ta
    rolf
     
    Rolf Latham, 7th May, 2019
    #7
  8. The Y-man

    The Y-man Moderator Staff Member

    Joined:
    18th Jun, 2015
    Posts:
    13,525
    Location:
    Melbourne
    This statement worries me greatly - if this is the impact of a slight slow down, what about a major slow down? I think use this opportunity to seriously deleverage and take stock.

    The Y-man
     
    The Y-man, 7th May, 2019
    #8
    skater, KayTea and Blacky like this.
  9. mikey7

    mikey7 Well-Known Member

    Joined:
    30th Mar, 2016
    Posts:
    1,173
    Location:
    Sydney, Brisbane
    Hopefully not the ones next to the McDonalds? :eek:
     
    mikey7, 8th May, 2019
    #9
  10. miscg

    miscg Active Member

    Joined:
    25th Jun, 2015
    Posts:
    40
    Location:
    Sydney
    No not those
     
    miscg, 8th May, 2019
    #10
  11. Shady

    Shady Well-Known Member

    Joined:
    20th Aug, 2015
    Posts:
    523
    Location:
    Sydney
    Where else then? The ones backing onto Windsor Rd...That metro is not the quietest thing...I can hear it at night and I'm a km away..hate to be living across the road from it.
     
    Shady, 8th May, 2019
    #11
  12. albanga

    albanga Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    2,701
    Location:
    Melbourne
    Start with seeing a broker to work out your new world capacity. If I assume the IO period was 5 years ago and your business has since slowed down it’s not likely to be very pretty (again assuming you were topped out 5 years ago).

    Based upon that discussion you will know what is possible and what to do next.
    With declining business sales I would have to say deleveraging though sounds a good bet.
     
    albanga, 8th May, 2019
    #12
    John_BridgeToBricks likes this.
  13. miscg

    miscg Active Member

    Joined:
    25th Jun, 2015
    Posts:
    40
    Location:
    Sydney
    Yes that’s what I’m thinking, the question is which one.
    Thinking of selling an addditional one I have which would pay of my PPOR.
     
    miscg, 8th May, 2019
    #13
  14. Trainee

    Trainee Well-Known Member

    Joined:
    24th May, 2017
    Posts:
    10,347
    Location:
    Australia
    Your focus should be on liquidity, not necessarily lower debt.
     
    Trainee, 8th May, 2019
    #14
    Propertunity likes this.
  15. Propertunity

    Propertunity Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    3,476
    Location:
    NSW
    Is there any chance you can do something to bring in extra profits / cashflow (ie second job or ask spouse to get a job o_O).
    Part of the trick to making wealth through property is to hang onto it long enough ie buy time.
    How long have you owned the properties?
    If business was going OK, would there be any of the properties you'd still like to get rid of? or are you happy with all of your purchases and happy to hold for the long term, if finance permitted?
     
    Propertunity, 8th May, 2019
    #15
    QldKoolies, Redwing, albanga and 1 other person like this.
  16. Jess Peletier

    Jess Peletier Mortgage Broker & Finance Strategy, Aus Wide! Business Member

    Joined:
    18th Jun, 2015
    Posts:
    6,685
    Location:
    Perth WA + Buderim Qld
    It may not be all doom and gloom - as long as your 2018 financials are okay, you might be fine to move lenders. Let's not panic just yet....

    First step is a broker who can tell you if you've actually got anything to worry about. After that, you'll know whether you need to take more drastic action.
     
    Jess Peletier, 8th May, 2019
    #16
    Jaik2012, Terry_w, John_BridgeToBricks and 1 other person like this.
  17. Terry_w

    Terry_w Lawyer, Tax Adviser and Mortgage broker in Sydney Business Member

    Joined:
    18th Jun, 2015
    Posts:
    42,001
    Location:
    Australia wide
    Thats the beauty of being self employed, the effect of the slow down in business won't show up for lending for about 12 to 18 months
     
    Terry_w, 8th May, 2019
    #17
    ChrisP73 and John_BridgeToBricks like this.
  18. John_BridgeToBricks

    John_BridgeToBricks Buyer's Agent Business Member

    Joined:
    25th May, 2018
    Posts:
    2,430
    Location:
    Sydney
    Lower debt is helpful, particularly in stormy economic weather.

    The problem is that it is not always up to the borrower to do IO or P&I. Sometimes you have to agree to P&I get the loan - at which time your focus is on debt reduction and not liquidity whether you like it or not.
     
    John_BridgeToBricks, 8th May, 2019
    #18
  19. MTR

    MTR Well-Known Member

    Joined:
    19th Jun, 2015
    Posts:
    27,859
    Location:
    My World
    Its not just about being able to meet service criteria but whether the valuations come in?
     
    MTR, 8th May, 2019
    #19
    mickyyyy likes this.
  20. Trainee

    Trainee Well-Known Member

    Joined:
    24th May, 2017
    Posts:
    10,347
    Location:
    Australia
    If the op suddenly wins 100k, are they better off holding that in an offset (liquidity) or pay off debt? When p&i is coming up and refinancing or sale is uncertain?
     
    Trainee, 8th May, 2019
    #20
Page 1 of 2